Delay in Plans of IndiGo Airlines

Issue: 4 / 2018

High fuel price and aircraft acquisition costs have prompted IndiGo to have second thoughts on acquiring Airbus A330neo wide-body jets through which it had planned to launch low-cost, long-haul direct flights to European cities by the end of the year. Instead, the airline is weighing options to acquire the 206-seat A321LR to operate flights to European cities in nine-hour range. A representative said that IndiGo would increase its international destinations in West Asia, Southeast Asia and China. IndiGo will also launch flights to Phuket, Istanbul, Abu Dhabi, Hong Kong, Kuwait, the Maldives and Kuala Lumpur between October 2018 and March 2019. What worries the airline in acquiring the wide bodies is that it doubts there will be sizeable passenger traffic to make the operations profitable. With rising jet fuel price and currency fluctuation making business tougher for airlines, IndiGo may not yet venture into a new operation.“Wide-body aircraft have almost twice the operational costs compared with the narrow-body aircraft. This means we need sizeable passenger traffic to cover the costs of the wide-body aircraft for each departure,” said a representative of the airline who was aware of the plan.

IndiGo’s rival SpiceJet has also shelved plans of launching flights to London, citing high aircraft acquisition cost. “The question is the cost. The high cost of ownership of new-generation wide bodies is a major impediment to the development of longhaul, low-cost air travel,” SpiceJet CMD Ajay Singh said.